Business

Stock markets sell off on renewed uncertainty over COVID-19 and U.S. election

[ad_1]

Stock markets around the world sold off on Monday as surging coronavirus infections prompted a new wave of fear and uncertainty, barely a week before a U.S. election that could reshape global geopolitics.

The Dow Jones Industrial Average finished the day at 27,685, down 689 points or 2.3 per cent. At the lowest point, the benchmark group of 30 large U.S. companies was off by more than 900 points.

The broader S&P 500 and technology-focused Nasdaq fared slightly better, but both closed down by almost two per cent.

The reason for the selling was a new wave of fear washing over markets as COVID-19 infections are rising to record levels in many places.

Spain’s government declared a national state of emergency on Sunday that includes an overnight curfew, while Italy ordered restaurants and bars to close each day by 6 p.m. and shut down gyms, pools and movie theatres.

Numerous Latin American nations also set their own daily case records over the weekend.

After two record days of more than 80,000 new cases over the weekend, the seven-day average of new cases in the U.S. is now at 68,767, according to data compiled by Johns Hopkins University. 

“And nobody is quite sure about what the response is going to be,” said Colin Ciezinsky, chief market strategist with SIA Wealth Management. “Are we going to see widespread lockdowns or more targeted rollbacks? Markets are like a deer caught in headlights.”

TSX down, too

Canadian stocks got swept up in the gloom, although on the whole they held up comparatively better.

The TSX’s main index lost 257 points, down 1.6 per cent on the day. 

Travel-related companies were hit hardest, with shares in Air Canada losing more than $1 to close at $15.91. Those same shares were valued at more than $50 apiece in January, but that was before COVID-19 wiped out demand for air travel.

Energy companies were battered too, as the price of oil lost more than three per cent with a barrel of the North American benchmark known as WTI closing at $38.52 US.

Oil’s sell off was mainly due to COVID-19, said Judith Dwarkin, chief economist at Enverus. “COVID’s second wave or third wave has enveloped Europe and prompted a new raft of travel restrictions,” she said. “It’s not surprising there’s heightened volatility in the market.”

Surging coronavirus infections have prompted a new wave of uncertainty on stock markets. (Lucas Jackson/Reuters)

Shares in three of the biggest oil companies in Canada — Cenovus, CNR Limited, and Suncor — all fell. Cenovus plunged by eight per cent to $4.47 despite news the company was planning to take over smaller rival Husky in a $23 billion deal.

U.S. election impact

Renewed coronavirus fears were the main thing roiling markets, but the U.S. election was also a contributing factor, Ciezinsky said.

“People are starting to take money off the table,” he said. “They aren’t sure what the result might be or if it is disputed [so] this is about fear and uncertainty. People don’t know what’s going to happen.”

Hopes are also fading that Democrats and Republicans will come together on another stimulus package, but Esty Dwek, head of global market strategy at Natixis Investment Managers, said some sort of deal is likely once the uncertainty of the election can be settled.

“It’s going to be a little bit volatile in the next week depending on the results, but we’re not expecting weeks of uncertainty,” she said.

[ad_2]

SOURCE NEWS